A recent hike in court fees, effective from 9th March, will impact on SMEs, as the costs of taking a case to court make the UK legal system one of the most expensive in the world.
Research conducted last year found that more than a third of UK companies did not take legal action because of the financial cost, time-consuming process and the complexity of navigating the legal system.
The recent rise in court costs, of some 600%, is likely to exacerbate this as many SMEs become priced out of the court system, forcing them to consider alternative ways of settling disputes without resorting to litigation.
Notwithstanding tentative improvements in the regional economy, liquidity is still challenging for many SMEs. So they need to feel confident about the options open to them in order to claw back any money owed to their businesses.
The key to avoiding the need for court action is doing your homework when it comes to suppliers.
- Be sure to check who you are contracting with – sometimes you think you’re contracting with a big name, ‘safe’ supplier, but check the small print as sometimes it can be a subsidiary company with fewer assets.
- Check your suppliers’ credit policy and understand the terms of it as well as the process of the credit cycle.
- Get credit terms agreed in advance with suppliers and prepare steps to collect the money – know customers’ payment processing days and their invoice process.
Muckle can help your business navigate through the credit cycle with a network of contacts and expert lawyers to help inform your strategy to deal with suppliers who can’t, or won’t pay.
Court should be the last resort and we’ll be honest with you if we think that court proceedings aren’t necessary, guiding you through steps that could help save your business expensive legal costs.
For further help or advice please contact Andrew Cawkwell on 0191 211 7957 or email [email protected].